[Audit Report on the Receipt and Expenditure of Funds by the Utah Reclamation Mitigation and Conservation Commission for Fiscal Years 1996 and 1997]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 98-I-712

Title: Audit Report on the Receipt and Expenditure of Funds by
       the Utah Reclamation Mitigation and Conservation Commission
       for Fiscal Years 1996 and 1997

Date:  September 30, 1998




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U.S. Department of the Interior
Office of Inspector General






AUDIT REPORT



RECEIPT AND EXPENDITURE OF FUNDS
BY THE UTAH RECLAMATION MITIGATION
AND CONSERVATION COMMISSION FOR
FISCAL YEARS 1996 AND 1997


REPORT NO. 98-I-712

SEPTEMBER 1998






MEMORANDUM


             TO:  The Secretary

           FROM:  Richard N. Reback
                  Acting Inspector General

SUBJECT SUMMARY:  Final Audit Report for Your
                  Information  -  "Receipt and Expenditure of
                  Funds by the Utah Reclamation Mitigation
                  and Conservation Commission for Fiscal
                  Years 1996 and 1997" (No. 98-I-712)


Attached for your information is a copy of the subject final
audit report. The objective of our audit was to determine
whether the Utah Reclamation Mitigation and Conservation
Commission received and expended  mitigation and conservation
funds in compliance with Titles II, III, and IV of the Central
Utah Project Completion Act.

We found that the Commission received,  expended,  and awarded
mitigation  and  conservation  funds  in  compliance with  the
applicable titles of the Act.  However, in administering funds
awarded to the Central Utah Water Conservancy  District  under
certain  cooperative  agreements,  the  Commission did not (1)
obtain   copies   of   single  audit  reports  or   sufficient
documentation on the Federal funds expended by the District to
substantiate that the funds  were  used for intended purposes;
(2) limit cash advances to immediate  disbursement  needs; and
(3) collect interest earned on the advance funds, as  required
by  the  Single Audit Act and the Department of the Treasury's
Financial  Manual.   The  Commission  also  did  not  meet the
reporting  requirements of the Central Utah Project Completion
Act.  As a result, the Commission did not ensure that District
expenditures   totaling   about  $1.7  million  were  made  in
accordance with the terms and  conditions  of  the cooperative
agreements, that funds advanced to the District  were  limited
to  immediate  disbursement  needs, and that interest of about
$55,000 earned on excess advances was recovered.  In addition,
the Congress and other Federal and State of Utah officials may
not  be  aware  of the mitigation  and  conservation  measures
planned and implemented  or  of  the  effectiveness  of  these
measures because the annual reporting requirements of the  Act
were not met.

In  its  response, the Commission agreed with all seven of our
recommendations   to   address  these  issues.  Based  on  the
response, we considered  all  of  the recommendations resolved
but not implemented.

If   you  have any questions concerning  this  matter,  please
contact me  at  (202)  208-5745  or  Mr. Robert  J.  Williams,
Assistant Inspector General for Audits, at (202) 208-4252.


Attachment






                                             W-IN-OSS-001-98-M

                                            September 30, 1998

                          AUDIT REPORT


Mr. Michael C. Weland, Executive Director
Utah Reclamation Mitigation and
Conservation Commission
102 West 500 South - Suite #315
Salt Lake City, Utah 84101




Dear Mr. Weland:

Subject:  Audit Report on the Receipt and Expenditure
          of Funds by the Utah Reclamation Mitigation
          and Conservation Commission for Fiscal Years
          1996 and 1997 (No. 98-I-712)

This  report  presents the results of our audit of the
receipt  and  expenditure   of   funds   by the   Utah
Reclamation  Mitigation  and  Conservation Commission.
The objective of our audit was  to  determine  whether
the  Commission  received and expended mitigation  and
conservation funds  in compliance with Titles II, III,
and IV of the Central  Utah  Project  Completion  Act.
Our  audit included a review of Commission receipt and
expenditure  activities  that  occurred  during fiscal
years 1996 and 1997.  We performed the audit  based on
a July 3, 1997, request from the Executive Director of
the  Commission  and as a followup to our August  1996
report.[1]

BACKGROUND

The Reclamation Projects  Authorization and Adjustment
Act  of  1992  (Public Law 102-575)  consisted  of  40
separate titles  covering  a wide variety of Bureau of
Reclamation  projects  and  activities.    Titles   II
through  VI  of  the  Act,  known  as the Central Utah
Project  Completion  Act,  provided  for  the  orderly
completion  of the Project by the Central  Utah  Water
Conservancy District,  with  oversight provided by the
Department  of  the  Interior's Central  Utah  Project
Completion Act Office.   The  Act  also  increased the
Project's  appropriations  ceiling; provided  for  the
construction  of  facilities  to   deliver  water  for
irrigation, municipal and industrial use, and instream
flows  to specified areas within the  Project  service
area; and  authorized  fish,  wildlife, and recreation
mitigation and conservation activities.


**FOOTNOTES**

[1]:The  Office of Inspector General  survey  report  "Utah  Reclamation
Mitigation  and Conservation Commission" (No. 96-I-1114) stated that the
Commission had  not  established  adequate  financial and administrative
policies  and  procedures  and  that  its accounting  records  were  not
auditable (see the Prior Audit Coverage  section of this report).  Title
IV,  Section  402(e), of the Central Utah Project  Completion  Act  also
requires the Office  of  Inspector  General  to  audit  the Commission's
financial management of the Utah Reclamation Mitigation and Conservation


Title  III  of the Act authorized the Utah Reclamation
Mitigation and  Conservation  Commission to coordinate
implementation  of  fish,  wildlife,   and  recreation
mitigation and conservation activities among  Federal,
State   of   Utah,   and   local  government  resource
management  agencies,  universities,   and   nonprofit
environmental  organizations.   The Commission,  which
was established in 1994, is responsible  for  planning
and  administering Federal mitigation and conservation
funding authorizations.[2] Mitigation and conservation
appropriations  are  received through the Central Utah
Project Completion Act  Office  and deposited into the
Utah Reclamation Mitigation and Conservation  Account.
The  Act  authorizes  the  Commission to use up to  $1
million   annually   to   fund   its    administrative
expenses.[3]

Title  IV of the Act established the Utah  Reclamation
Mitigation   and  Conservation  Account  in  the  U.S.
Treasury.  Annual  contributions  into the Account are
obtained  from  the  Department  of the  Interior  ($5
million),  the  Department  of Energy's  Western  Area
Power Administration ($5 million),  the  State of Utah
($3  million),  and the Central Utah Water Conservancy
District    ($750,000).[4]      The    Act    requires
contributions from the Department  of the Interior and
the  State  to  be  deposited  as principal  into  the
Account.[5]  While the contributions from the District
and  the  Department of Energy are  available  to  the
Commission  for  expenditures  in  accordance with the
Act,   including   administrative   expenses of    the
Commission,   the  Commission  may  elect  to  deposit
unexpended   contributions   into   the   Account   as
principal.   According   to   the  Act,  "[A]ll  funds
deposited  as  principal  in  the Account  shall  earn
interest in the amount determined  by the Secretary of
the  Treasury  on  the  basis  of the current  average
market yield on outstanding marketable  obligations of
the United States of comparable maturities."  Once the
Title   II   and   Title  III  project  authorizations
($173 million in total)  are  fully  appropriated, the
Commission will operate on future Department of Energy
contributions  and  on  the  interest  earned  on  the
principal invested in the Account.

The  Commission  develops  and selects mitigation  and
conservation projects pursuant to the  requirements in
Titles II and III of the Act  and  as  adopted  in the
Commission's  5-year  plan.[6]  Under the Commission's
current 5-year plan, projects  are designed to address
ecosystem  impacts  in five Utah watersheds,  such  as
dewatered streams and  losses  of  bird  and  riparian
habitat,    fish   and   wildlife   habitat,   angling
opportunities,  and  wetlands.   The Commission enters
into   various   agreements,   such   as   interagency
agreements  and cooperative agreements, with  entities
to perform the  mitigation  and  conservation projects
specified   in  the  Act  and  as  outlined   in   the
Commissions's  5-year plan.  As of September 30, 1997,
the  Commission  administered  55  active  agreements,
totaling about $32  million, with 13 cooperators.  The
largest cooperative agreements,  which  accounted  for
about  $31  million,  are  with the Central Utah Water
Conservancy District, the Bureau  of  Reclamation, the
Department of Agriculture's U.S. Forest  Service,  and
the  State  of  Utah's Division of Wildlife Resources.
During fiscal years  1996  and  1997,  the  Commission
received   Federal  appropriations  and  contributions
totaling about  $58.5  million, obligated and expended
about   $2  million  for  Commission   administration,
awarded  about   $20.6   million  for  mitigation  and
conservation  projects,  and   invested   about  $28.3
million (Appendix 2).  The remaining $7.6 million  was
unobligated at the time of our review.

SCOPE OF AUDIT

Our fieldwork was conducted at the Commission's office
in Salt Lake City, Utah, from November 1997 through
April 1998. To accomplish our objective, we reviewed
the Central Utah Project Completion Act and related
legislative history and legal documents; the
Commission's 5-year plan; and receipts of
appropriations and contributions, financial reports
and supporting accounting records, and administrative
and cooperative agreement expenditures for fiscal
years 1996 and 1997.[7] Inaddition, we visited the
Kamas fish  hatchery project and lands acquired by the
Commission for the Provo River restoration project. We
also interviewed officials from the Commission; the
Bureau of Reclamation's Upper  Colorado Region and the
Office of the Solicitor's Intermountain Region in Salt
Lake City;  and the U.S. Department of the Treasury in
Washington, D.C.  The purpose of the interviews was to
obtain  clarification  of the Act and an understanding
of  the  Commission's  mitigation   and   conservation
program,  accounting  system  and  financial  reports,
investments of Title IV contributions, and deposits at
the Treasury.

Our  audit was made in accordance with the "Government
Auditing Standards," issued by the Comptroller General
of the  United  States.  Accordingly, we included such
tests of records  and  other  auditing procedures that
were considered necessary to accomplish our objective.
We also evaluated the Commission's  system of internal
controls related to the receipt of appropriations  and
contributions  and  the  expenditure of administrative
and  mitigation and conservation  project  funds.   We
identified  an internal control weakness pertaining to
the Commission's administration of certain cooperative
agreements with  the  Central  Utah  Water Conservancy
District.  We also found that the Commission  had  not
submitted  the  annual reports required under the Act.
These weaknesses  and  recommended  corrective actions
are discussed in the Results of Audit  section of this
report.   The recommendations, if implemented,  should
improve the internal controls in these areas.  We also
noted minor issues related to accounting and financial
reporting that will be reported to the Commission in a
separate letter.

PRIOR AUDIT COVERAGE

The General  Accounting  Office  has not conducted any
audits of the Commission.  However,  in  August  1996,
the  Office  of  Inspector  General  issued the report
"Utah    Reclamation   Mitigation   and   Conservation
Commission"  (No. 96-I-1114), which concluded that the
Commission had  not established adequate financial and
administrative policies  and  procedures  and that the
Commission's  accounting  records  of the receipt  and
expenditure of funds for fiscal years  1994  and  1995
were  not  auditable.   As  a  result,  we  could  not
determine whether the Commission's funds were expended
in  accordance  with  the  Act.   The  report  did not
contain any recommendations because the Commission was
taking corrective actions to implement sound financial
and  administrative systems.  The Commission also  had
contracted with a certified public accounting firm for
financial  management  and  accounting services, which
included assisting the Commission  in  the development
of  fiscal  accounting,  budgeting,  contracting,  and
investing  procedures.  Our current audit  found  that
the accounting  firm had provided financial management
and accounting services  and  that  the Commission had
hired  a  financial officer, who has made  significant
improvements  to the Commission's financial management
system.   We  also   found   that   the   Commission's
accounting  records were auditable and that  financial
and accounting  policies  and  procedures  were  being
established.

                RESULTS OF AUDIT

We  determined that the Commission received, expended,
and  awarded  mitigation  and  conservation  funds  in
compliance  with Titles II, III, and IV of the Central
Utah Project Completion Act.  Specifically, for fiscal
years  1996 and  1997,  the  Commission  received  and
properly  accounted  for  the annual contributions and
appropriations,  authorized  and  expended  funds  for
appropriate Commission  administrative  activities and
mitigation  and  conservation projects, complied  with
the   Act's   annual  limitation   on   administrative
expenses,   and  properly   invested    contributions.
However, in administering funds awarded to the Central
Utah   Water  Conservancy   District   under   certain
cooperative  agreements,  the  Commission  did not (1)
obtain  copies  of  single audit reports or sufficient
documentation on the  Federal  funds  expended  by the
District to substantiate that the funds were used  for
intended   purposes;   (2)   limit  cash  advances  to
immediate disbursement needs; and (3) collect interest
earned on the advance funds, as required by the Single
Audit  Act  and  the  Department  of   the  Treasury's
Financial Manual.  In addition, the Commission did not
meet  the  reporting requirements of the Central  Utah
Project Completion  Act.   These  conditions  occurred
primarily because Commission officials were not  fully
aware  of  all  of  the Single Audit Act requirements,
received differing interpretations  from Department of
the Interior personnel as to the applicability  of the
Treasury   Manual  requirements,  and  had  what  they
considered to be higher priorities which precluded the
Commission   from   meeting   the   annual   reporting
requirement.   As  a  result,  the  Commission did not
ensure that District expenditures totaling  about $1.7
million  were  made  in accordance with the terms  and
conditions of the cooperative  agreements,  that funds
advanced  to  the  District  were limited to immediate
disbursement needs, and that interest of about $55,000
earned on excess advances was recovered.  In addition,
the Congress and other Federal and State officials may
not  be  aware  of  the  mitigation  and  conservation
measures   planned   and   implemented   or   of   the
effectiveness  of these measures  because  the  annual
reporting requirements of the Act were not met.

Single Audits

The Commission did  not  obtain copies of single audit
reports or sufficient information to determine whether
the District expended Commission  funds  in accordance
with  the  terms  and  conditions  of  the cooperative
agreements.  The Single Audit Act of 1984, as amended,
requires   that   recipients   of   Federal  financial
assistance   in   excess   of   $300,000   obtain   an
organizationwide audit to determine whether  (1) their
financial  statements  fairly  present their financial
position   in   accordance  with  generally   accepted
accounting  principles,  (2)  their  internal  control
systems provide  reasonable  assurance  that  they are
managing  Federal  financial  assistance  programs  in
accordance  with applicable laws and regulations,  and
(3) they have complied with laws and regulations which
may  have  a  material   effect   on  their  financial
statements.   The  audits performed under  the  Single
Audit   Act  identify  reportable   conditions[8]   or
material  weaknesses[9]  in  the cooperators' internal
control   structure,  which  are  presented   to   the
cooperators'  management,  along  with recommendations
for corrective actions.

We  found  that the District and the  State  of  Utah,
which included  the  Division  of  Wildlife Resources,
were  audited  under the Single Audit  Act  for  funds
expended in fiscal  years 1995 through 1997.  However,
the Commission's Financial  Officer  told  us that she
was not aware that the Commission should obtain copies
of the audit reports as a funding agency.  As a result
of our audit, the Financial Officer obtained copies of
the  District's single audit reports for fiscal  years
1996 and  1997  and  the  State of Utah's single audit
reports for fiscal years 1995 and 1996.

We reviewed the single audit reports for both entities
and  concluded  that  the  reports   did  not  contain
sufficient details to ensure that the funding provided
by   the  Commission  was  included  in  the   audits.
Therefore,  we  believe  that  the  Commission  should
obtain additional information on project expenditures.
In that regard, we found that the Division of Wildlife
Resources  was  providing the Commission with adequate
supporting  documentation   for   the   project  costs
incurred but that the District was not providing  such
documentation.     For   example,   the   Commission's
accounting records indicated  that  the  District  had
acquired land valued at about $958,000 in 1997 under a
cooperative   agreement,  but  the  District  had  not
provided   any  supporting   documentation   for   the
acquisition.

The Commission's  Executive  Director  stated that the
Commission   did   not   apply   the  same  level   of
accountability  for one of the cooperative  agreements
with  the  District  as  that  applied  to  the  other
agreements  with   the   District   and   with   other
cooperators   because   the   Central   Utah   Project
Completion  Act specifically directed the District  to
construct a water  development  project  for which the
Commission  was  required  to  contribute funding.[10]
The  Commission's  Project Manager  also  stated  that
requiring additional  documentation for District costs
would  result  in  duplicate  record  keeping  by  the
Commission and the District.  However, we believe that
since the Commission  had  entered  into a cooperative
agreement  with  the  District, the Commission  should
ensure that District costs are properly accounted for.
For example, we found that  the  other  cooperators we
reviewed  had provided the Commission with  supporting
documentation,  such  as computer printouts of project
costs  and  copies of invoices  and  payroll  records.
This supporting  documentation  was sufficient for the
Commission's    Financial    Officer    and    project
coordinators  to  approve and process the cooperators'
reimbursement requests.   Accordingly, we believe that
the Commission has not obtained  sufficient supporting
documentation to ensure that District  costs  totaling
about  $1.7 million[11] as of December 31, 1997,  were
in accordance  with  the  terms  and conditions of the
cooperative agreements.

Advances of Funds

The Commission did not ensure that  the funds advanced
to the District under cooperative agreements were used
in a timely manner. Volume 1, Part 6, Section 2025, of
the Department  of  the  Treasury  Financial   Manual,
applicable  to  all  Federal  agencies,  requires that
advances to a recipient organization be limited to the
minimum  amounts  necessary for immediate disbursement
needs and that the  timing  of  the cash advance be as
close  as  administratively  feasible  to  the  actual
disbursement by the recipient  organization.  However,
the  Commission's  cooperative  agreements   with  the
District  do  not require that advances be limited  to
immediate needs,  including one agreement which states
that  the Commission  will  advance  all  appropriated
funds within  30  days  of  the Federal appropriation.
The Commission's Executive Director  stated that funds
were  paid  to the District because the  Central  Utah
Project Completion  Act  required  the  Commission  to
contribute  funds  for  the  construction  of  a water
development  project.   However, we noted that neither
the Act nor the applicable appropriation acts provided
for advance payment of project  funds.  As of December
31,   1997,   the   Commission   had  advanced   about
$5.5 million  to the District, of which  the  District
had reported expenditures  of only about $1.9 million.
Accordingly, at the time of  our audit, the Commission
had advanced about $3.6 million  more  than would have
been  required  to  reimburse  the District  for  work
performed under the cooperative agreements.

Collection of Interest

The Commission did not collect the  interest earned on
the funds advanced to the District.  Volume 1, Part 6,
Section 2075.30a, of the Treasury Manual requires that
any  interest  earned  by a recipient organization  on
Federal  funds be promptly  refunded  to  the  Federal
program agency.   Section  2075.30b  of  the  Treasury
Manual  also  requires that the Federal program agency
deposit the interest  earned  into  a Treasury receipt
account.  The Commission's cooperative agreements with
the   District  require  that  the  District   provide
quarterly  reports  on  the  interest  earned on funds
advanced and supporting bank statements.  However, the
District had not provided the Commission with adequate
documentation on the interest earned or the supporting
bank  statements.   Contrary to Treasury requirements,
the cooperative agreements  also  indicated  that  the
interest  earned  on  the advances would be considered
supplemental funds of the  District to be used for the
performance of work under the  terms and conditions of
the agreement.  Commission officials told us that they
had not collected the interest earned because they had
received   differing   interpretations   from   Bureau
personnel  as  to the applicability  of  the  Treasury
Manual  requirements   to  the  Central  Utah  Project
Completion Act.  Accordingly,  the  Commission was not
certain whether the interest earned was to be used for
project  purposes,  retained  by  the  Commission,  or
returned to the Treasury.  As a result of  our  audit,
the   Commission's  Financial  Officer  obtained  bank
statements   and  supporting  documentation  from  the
District through  December 31, 1997, which showed that
the Commission should have recovered interest totaling
about $55,000 earned  on the advances, which according
to Treasury Manual requirements, should be remitted to
the Treasury.

Annual Reporting Requirements

The Commission did not  complete  or submit the annual
reports   required   by   the  Central  Utah   Project
Completion Act.  Section 301(g)(6) of the Act requires
the  Commission  to  submit  annual   reports  to  the
Secretary of the Interior, the Governor  of  the State
of  Utah,  the  Senate Committee on Energy and Natural
Resources, and the House of Representatives Committees
on Interior and Insular Affairs and on Merchant Marine
and Fisheries.  The  reports  are  to describe actions
taken   and  to  be  taken  by  the  Commission,   the
effectiveness   of  the  mitigation  and  conservation
measures implemented  to date, and potential revisions
or  modifications  to the  applicable  mitigation  and
conservation plan.  The reports were due on December 1
for 1995, 1996, and  1997.  The Commission's Executive
Director  told  us  that  the  reports  had  not  been
submitted because of  other  higher  priorities of the
Commission,    which    included    the   Commission's
involvement in preparing the 5-year plan, implementing
financial and administrative policies  and procedures,
and  meeting  financial  reporting requirements.   The
Executive  Director  also  stated  that  much  of  the
information required for the  annual  reports had been
included in the Commission's 5-year plan and quarterly
financial   reports.   A  "draft"  cumulative   report
through  September  30,  1997,  was  prepared  by  the
Commission's  Public  Information  Officer but had not
been  approved  by  the  Executive  Director   or  the
Commissioners  at  the completion of our audit.  As  a
result, the Congress,  the  Secretary of the Interior,
and the Governor of Utah may not be fully aware of the
mitigation and conservation measures  that are planned
or that have been performed by the Commission  and the
effectiveness of such measures.

Recommendations

We recommend that the Commission's Executive Director:

1. Obtain  annual  single  audit  reports  from  those
   cooperators which receive Federal financial assistance
   of  more  than  $300,000 per year to substantiate that
   the   costs   were   incurred   for   mitigation   and
   conservation   project  purposes   and   to   identify
   reportable conditions  or material weaknesses.  If the
   reports do not contain sufficient details to determine
   whether  the funds provided  by  the  Commission  were
   included in  the  audit, the Commission should require
   the  cooperators to  provide  supplemental  supporting
   documentation of project costs.

2. Request additional supporting documentation from the
   Central    Utah    Water   Conservancy   District   to
   substantiate that costs  of $1.7 million were incurred
   by  the  District in accordance  with  the  terms  and
   conditions of the cooperative agreements.

3. Amend cooperative  agreements  with  the District to
   limit  the  advances  of funds and the timing  of  the
   advances to the District's immediate funding needs.

4. Ensure that the District provides quarterly interest
   earnings reports and supporting  bank  statements in a
   timely manner.

5. Amend cooperative agreements with the  District  to
   require  that  the interest earned on cash advances be
   remitted  to  the   Commission   for  deposit  in  the
   Treasury.

6. Recover  the $55,000 of interest  earned  on  funds
   advanced to the District and remit it to the Treasury.

7. Complete and  submit  the required annual reports to
   the Congress and other Federal and State officials.


Utah Reclamation Mitigation and Conservation
Commission Response and Office of Inspector General
Reply

In the September 25, 1998,  response  (Appendix  3) to
the  draft  report  from  the Executive Director, Utah
Reclamation  Mitigation and  Conservation  Commission,
the Commission agreed with all of the recommendations.
Based  on  the  response,   we   consider   the  seven
recommendations    resolved   but   not   implemented.
Accordingly, the unimplemented recommendations will be
referred  to  the  Assistant   Secretary   for  Policy
Management and Budget for tracking implementation, and
no further response to the Office of Inspector General
is required (see Appendix 4).

The  legislation,  as amended, creating the Office  of
Inspector General, requires  semiannual  reporting  to
the Congress on all audit reports issued, the monetary
impact  of  audit findings (Appendix 1), actions taken
to implement audit recommendations, and identification
of each significant recommendation on which corrective
action has not been taken.

We appreciate  the  assistance of Commission personnel
in the conduct of our audit.


                           Sincerely,



                           Robert J. Williams

                           Assistant Inspector General
                           for Audits


cc:  Commissioners, Utah Reclamation Mitigation and
     Conservation Commission Program Director,
     Central Utah Project Completion Act Office


 **FOOTNOTES**

[2]:The funding consists  of  a  $28 million authorization applicable to
the Title II mitigation activities  that were previously committed to by
the Bureau of Reclamation and a $145 million authorization applicable to
the Title III mitigation activities.

[3]:Sections  301(I)(2)  and  402  (b)(3)(C)   of   the  Act  limit  the
Commission's administrative expenses to $1 million annually  and require
the amount to be indexed proportionally each year based on the  increase
in  the  Consumer  Price  Index  for  urban  consumers, published by the
Department  of  Labor.   The Commission's administrative  expenses  were
limited to $1.056 million  for  fiscal  year 1996 and $1.086 million for
fiscal year 1997.

[4]:Department of the Interior, State of  Utah,  and  Central Utah Water
Conservancy  District contributions are to be made through  fiscal  year
2001,  while the  contributions  from  the  Department  of  Energy  will
continue  into perpetuity to provide a funding source for the Commission
and  its  successor,  the  Utah  Division  of  Wildlife  Resources.   In
addition, the  contributions  from  the  District  and the Department of
Energy are to be indexed proportionately each year based on the increase
in  the Consumer Price Index for urban consumers, as  published  by  the
Department of Labor.

[5]:The  Account  principal  provides  a  source of income to manage and
maintain the investments in fish and wildlife and recreation features of
the projects performed in accordance with the  Act. Funds deposited into
the  Account  as  principal  may not be withdrawn or  expended  for  any
purpose by the Commission.

[6]:The Act required the Commission  to  adopt  a  comprehensive  5-year
operating   plan  through  a  prescribed  public  planning  process  and
consultation with Federal and state agencies.  According to the Act, the
plan was to consist  of  the  specific  objectives and measures that the
Commission intended to administer, and only  those  projects included in
the plan could be implemented.  The initial 5-year plan  was  adopted in
May 1996 and is updated annually with a comprehensive review of projects
and priorities every 5 years.

[7]:We  reviewed  expenditures related to Commission administration  and
six cooperative agreements,  which  consisted of two agreements with the
District and one agreement each with the Bureau of Reclamation; the U.S.
Forest Service; the State of Utah's Division  of Wildlife Resources; and
the University of Nevada at Reno, Nevada.

[8]:Reportable conditions are matters coming to  the auditor's attention
that should be communicated to agency management.   These matters relate
to significant deficiencies in the design or operation  of  the agency's
internal  control  structure  that  could  adversely affect the agency's
ability  to  record,  process,  summarize,  and  report  financial  data
consistent   with   the  assertions  of  management  in  the   financial
statements.

[9]:A material weakness is a reportable condition in which the design or
operation of one or more  of  the  specific  internal  control structure
elements does not reduce to a relatively low level the risk  that errors
or  irregularities  in  amounts  that would be material to the financial
statements being audited may occur  and  not  be  detected  in  a timely
period  by  employees  in the normal course of performing their assigned
functions.

[10]:Section 303(b)(4) of  the  Act  requires  the Commission to provide
$10.5 million to the District for the construction  of the Daniels Creek
Replacement  Pipeline  ($10  million)  and  for  the  leasing  of  water
($.5 million) as a part of the Wasatch County Water Efficiency Project.

[11]:The  District  claimed  total project costs of $1.9 million  as  of
December 31, 1997.  The District's  single  audit  report for the fiscal
year ended June 30, 1997, identified Commission project  costs  of about
$.2 million.



                                                              APPENDIX 1
CLASSIFICATION OF MONETARY AMOUNTS


----------------------------------------
                             Funds To Be
     Finding Area              Put To
                             Better Use

 Collection of Interest
                              $55,000
----------------------------------------



                                                              APPENDIX 2
SOURCES AND USES OF UTAH RECLAMATION
MITIGATION AND CONSERVATION COMMISSION FUNDS
FOR FISCAL YEARS 1996 AND 1997



Sources:

Amounts

Federal Appropriations:

Title II  Projects            $4,832,000
Title III Projects            25,371,000 $30,203,000

Annual Contributions (Title IV):
   U.S. Department of Interior            10,000,000
   U.S. Department of Energy*             10,715,000
   State of Utah                           6,000,000
   Central Utah Water Conserv. District*   1,606,700

Total                                     28,321,700


$58,524,700

Uses:

Commission Administrative:*

Expenditures                              2,004,204
Unobligated                    137,896    2,142,100

Mitigation and Conservation Projects:

Expenditures and Obligations             20,615,081
Unobligated                  7,445,819   28,060,900

Investment                               28,321,700

Total                                   $58,524,700

*Sections 402(b)(3)(C) and 301(I)(2) of Public Law 102-275 state that
the annual contributions and Commission administration expenses "shall
be increased proportionally on March 1 of each year by the same
percentage increase during the previous calendar year in the Consumer
Price Index for urban consumers, published by the Department of Labor."

 APPENDIX 3
                                               Page  1 of 4

 APPENDIX 3
                                               Page  1 of 4

 APPENDIX 3
                                               Page  1 of 4

 APPENDIX 3
                                               Page  1 of 4

 APPENDIX 3
                                               Page  1 of 4

 APPENDIX 4

        STATUS OF AUDIT REPORT RECOMMENDATIONS

 --------------------------------------------------------
  Finding/
 Recommendation
 Reference   Status        Action Required

 --------------------------------------------------------
  1, 2, 3,   Resolved;     No further response to the
 4, 5,       not           Office of Inspector General is
  6, and 7   implemented   required.  The recommendations
                           will be referred to the
                           Assistant Secretary for
                           Policy, Management and Budget
                           for tracking of
                           implementation.
 --------------------------------------------------------






ILLEGAL OR WASTEFUL ACTIVITIES SHOULD BE REPORTED

TO THE OFFICE OF INSPECTOR GENERAL BY:

Sending written documents to:



Within the Continental United States

U.S. Department of the Interior
Office of Inspector General
1849 C Street,N.W.
Mail Stop 5341
Washington, D.C. 20240

Calling:

Our 24 hour
Telephone HOTLINE
1-800-424-5081 or
(202) 208-5300

TDD for hearing impaired
(202) 208-2420 or
1-800-354-0996



Outside the Continental United States


Caribbean Region

U.S. Department of the Interior
Office of Inspector General
Eastern Division- Investigations
1550 Wilson Boulevard
Suite 410
Arlington, Virginia 22209

Calling:
(703) 235-9221


North Pacific Region

U.S. Department of the Interior
Office of Inspector General
North Pacific Region
238 Archbishop F.C. F'lores Street
Suite 807, PDN Building
Agana, Guam 96910


Calling:
(700) 550-7428 or
COMM 9-011-671-472-7279